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Elder's Home
| Instructor: Dr. John Elder Phone/Office: 231-6532; Putnam 22 E-mail: john.elder@ndsu.edu Web: http://www.ndsu.edu/ndsu/jelder/ |
Course: BUSN 441/641; 4909/4922 Meeting: T, Th 11:00-12:15 Min 334 Prereq: BUSN340;ECON201/2;STAT330 Office Hr: T, Th 12:45-2:15, after class, appt |
Investments - Description
Welcome to Investments! This course addresses issues dealing with investing in financial markets, such as the trading and valuation of equities and the management of equity portfolios. This courses focuses primarily on equities, while another course (BUSN 444 Money and Capital Markets) focuses primarily on bonds and bond markets. Will you learn how to make a million dollars? No. The best we can hope to do is to understand the investing process and the risks associated with various investments, so that we can construct portfolios that reflect the risks we are willing to take.
Career Focus
This course provides the foundation for the student to become a junior member of an investment company. Investment companies include banking, mutual fund, insurance, brokerage, investment banking and other companies that typically intermediate between investors with cash and companies with securities. The concepts can be applied to personal investing, but the course is geared more toward institutional investing.
Course Objectives
Students completing this class will be able to define relevant terminology as well as do the following:
(1) describe the types of instruments traded in financial markets (primarily equities and equity based securities, such as mutual funds, ETFs and equity options) and the markets in which these trade, such as NASDAQ and the New York Stock Exchange.
(2) analyze accounting statements and access of firm level data via the web
(3) value equity securities utilizing discounted cash flow models and web-based resources;
(4) analyze of portfolios of financial assets for desirable properties, especially utilizing tools available via the web;
(5) describe the use of derivative securities for hedging and speculation (time permitting).
As a professional course, the curriculum is designed to provide sufficient foundation for graduates to pursue professional certification, such the Chartered Financial Analyst (CFA®) program. This requires a moderately high level of difficulty. My experience has been that undergraduate students who did not perform well in Principles tend to have some difficulty with this course, so be sure to keep up with the reading and assignments!
If you have any problems with this class, please see or e-mail me. I am available after class and always during posted office hours, but feel welcome to e-mail or call me at the office anytime. (Please note that the worst time to drop by is usually the 30 minutes just prior to class.) I am at the office everyday (plus some weekends and evenings), unless I have another class, appointment or meeting. If I am not in, the best way to leave a message is via e-mail. You may also submit concerns and suggestions to me anonymously via a feedback form linked to my web page. You should know that I take seriously my obligation to provide students a classroom experience that promotes and facilitates learning. Finally, be sure to also read my secret tips for exams.
Course materials
The materials you will need for this course are:
-Bodie, Kane and Marcus, Essentials of Investments, 7th ed, McGraw-Hill Irwin. Students often ask if they can use an older edition of the textbook. My response is that you can, but you are responsible for the material in this edition. In practice, it is very difficult to sort out the new material from the old, as page numbers and chapter numbers change.
-Wall Street Journal (optional), sign up on-line here.
-OTIS trading account, shared with at least 3 others.
Sign up at http://wharton.pearsoncmg.com/otis with course ID otis-elde895224
You will need to click the link that says "purchase access to this Website online", not the button that says "Register"!
-PRS transmitter, available at the bookstore. Instructions for registering your transmitter for this class are at http://its.ndsu.edu/instruction_and_research/prs/, then click on "student resources".
-Any calculator that computes exponents, although a financial calculator is the most beneficial.
The Bodie, Kane and Marcus text is one of the most popular and state-of-the-art investments texts available. There is also a link to student resources (including more practice problems) here. You will find this text to be an excellent resource. The Wall Street Journal is also available at the library at no charge. The trading account at OTIS will provide the resources necessary for you to maintain and mock trading account, which will be used in a sequence of assignments throughout the semester. For the OTIS assignments, please form groups of 3 or 4 students.
If you are interested in learning more about practical finance and the recent history and culture of Wall Street, there are a number of very entertaining bestsellers you should consider reading. Here are a couple (more on this web page):
When Genius Fails: The Fall of Long-term Capital Management, by Roger Lowenstein
Liar's Poker and The New, New Thing both by Michael Lewis
Course Organization
This course is designed to foster participation and interaction. Usually participation will be solicited in a question and answer format, and you will frequently be called upon by name to participate. This requires that you prepare for each class by keeping up with the readings and assignments. To encourage you to do so, there will be several quizzes throughout the term. The quizzes may be announced or unannounced, so you should be prepared for a short quiz each lecture, but especially when specific "learning exercises" are suggested. (Learning exercises are similar to homework, but they are not collected. The learning exercises are designed for your benefit: to help create and reinforce your learning and hence your performance on exams. I call them learning exercises, because if you do not work through them, you are not likely learn.)
n addition, you will periodically be required to prepare a short, one or two paragraph summary of a news article related to finance or economics (e.g,. from the WSJ), and you should be prepared to discuss that article in class. Your discussion should be no more than 2 minutes (practice to be sure you finish within that limit) and your summary must be typed, include the reference to the original article and turned in to Blackboard on the day you present it. Be careful -- your summary must be in your own words, not plagiarized from the original article. I will assign dates for the news summaries on the first or second day of class.
In addition to the usual textbook material, we will be working on some computer assignments during the semester. Students are expected to be proficient in the use of computer spreadsheets, such as Excel.
Course Etiquette:
1. Please attend class and be on time.
2. If you do miss class, please retrieve notes and announcements from a classmate.
3. Please attend class to review your exam. There are no provisions for make-up examinations or extra credit.
4. For assignments to be handed in, essays must be typed, multiple pages stapled, and late assignments cannot be accepted.
5. All work in this course must be completed in a manner consistent with NDSU University Senate Policy, Section 335: Code of Academic Responsibility and Conduct. ( http://www.ndsu.edu/policy/335.htm )
6. Any students with disabilities or other special needs, who need special accommodations in this course are invited to share these concerns or requests with the instructor as soon as possible.
If you find these conditions unacceptable, you should contact me at the beginning of the semester to seek counsel. Continued enrollment indicates your acceptance of these conditions.
Grading
There will be one midterm exam, and one cumulative final exam and several assignments/quizzes. The exams will be administered on the dates indicated on the course outline. Excuses to the exams are very rare, but would include a College sponsored excursion or extreme illness documented by a physician's note. If you are excused from an exam for such a purpose, your final exam will be reweighted to account for the missing score. Assignments and quizzes will be graded on a scale from 1 to 5. In the rare event that you have questions regarding the grading of a midterm exam or assignment, you must see me before the final exam is administered. Letter grades will be determined by computing an average according to the weighting scheme below, where an average of 90+ is an "A"; 80-89 is a "B"; 70-79 is a "C"; 65-69 is a "D"; and below 65 is an "F". It is possible that a curve on the final average will be implemented, if appropriate. The weighting scheme is as follows:
HW & Quizzes 30%; Midterm I 35%; Final 35%.
Exams will typically include both problems and some multiple choice. Please bring a blue OCR bubble sheet to class for exams.
Graduate Credit
Students taking the course for graduate credit must also complete a survey paper on an acceptable topic related to the field of finance. The topic must be discussed and approved by me during the first four weeks of the semester. The survey paper must draw on sources that are of adequate depth and quality to justify graduate credit and is normally about 8-10 pages in length. Newspapers and many freely available sources on-line are not likely to be sufficient. Two excellent sources that merge academic research with practitioner applications are Financial Analysts Journal and Journal of Portfolio Management. Both are available electronically through the NDSU library. Please see me as soon as possible to discuss possible topics and sources. The survey paper will account for 5% of the course grade (correspondingly decreasing the "HW & Quiz" component above by 5%), and is due one month prior to the last day of class.
Course Outline (See "Schedule" on the web for weekly topics and updates.)
* Market Organization and Instruments - BKM 1, 2, 3, 4..
* Equity Valuation and Analysis - BKM 13.
* Portfolio Construction and Analysis - BKM 21, 5, 6, 7 (skip 7.5), 8, 9.
* Portfolio Management - BKM 18 (skip 18.6 and 18.7).
* Introduction to Options - BKM 15.
Exams (Please mark these days in your calendar now.):
Midterm I: October 16, 2008 Final: December 17, 2008 in class